CREDIT SUISSE: These 3 things could send China's markets crazy

Three key events could spur the down-and-out Chinese stock
markets, according to Credit Suisse.

China's markets have been sluggish in recent months, with Credit
Suisse describing investors as worried about the weak renminbi
and unpredictable policies from Beijing.

But in the bank's China A-Share Strategy note,
research analyst Li Chen lists three possible catalysts: the next
interest-rate hike in the US, expected at the Federal Reserve's
June meeting; the possible inclusion of Chinese A-shares in the
MSCI global share indexes; and the 2016 Beidaihe conference, one
of the most crucial annual meetings of Chinese policymakers.

Inclusion would be a major boost, as it would essentially act as
an acknowledgement that Chinese stocks are globally important.
That would encourage more foreign money to flow into Chinese
markets.

Beidaihe, an annual conference of the most important Chinese
policymakers that is named after the seaside resort in which it
is held, could spur activity too. The conference is never
formally announced, and discussions are always held behind closed
doors, but any major policy changes stemming from the discussions
could help boost markets, Credit Suisse argues. Beidaihe is
generally held in the first week of August.

When it comes to a Fed rate hike, an increase in base rates could
help signal to Chinese investors that global economic confidence
is increasing.

Here are some of the key extracts from Li Chen's note:

Local investors are paying close attention to talk of the FED
interest hike, although they do not have enough source/knowledge
to draw their own conclusions and are forced to rely on news
channels such as Bloomberg.

Some investors believe that inclusion into the MSCI could be a
very important catalyst for the A-share market. They agreed that
the near-term impact could be limited as the size of the fund
inflow is about US$1.7-2.2 bn, accounting for 1.5 hours turnover
in the A-share market.

Beidaihe conference is another opportunity for possible policy
change. Five members (seven in total) of the Standing Committee
of the Political Bureau are now conducting surveys and
investigations across the country, which may signal an important
meeting to discuss economic outlook and policy in the near
future.

Here's the chart showing how slow things are in the Chinese
markets right now: